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Financial Development and Poverty Reduction: Evidence from Selected African Countries

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  • Yaya Keho

Abstract

This paper examines the relationship between financial development, economic growth and poverty reduction in nine African countries for the period 1970-2013. It uses the ARDL bounds testing approach. The results show evidence of long-run relationship among the variables in height countries with GDP and financial deepening having a positive effect on poverty reduction in five countries (Benin, Cameroon, Cote d¡¯Ivoire, Gabon and South Africa), and poverty reduction having a positive effect on economic growth in three countries (Ghana, Nigeria and Senegal). The study also reveals bidirectional long-run causality between economic growth and poverty reduction in Cote d¡¯Ivoire, Gabon and South Africa, and bidirectional long-run causality between finance and poverty reduction in Benin, Cameroon and South Africa. These findings suggest that policies aimed at increasing economic growth and improving access to credit would reduce poverty but also that measures of poverty reduction would lead to economic growth and financial deepening in these countries.

Suggested Citation

  • Yaya Keho, 2017. "Financial Development and Poverty Reduction: Evidence from Selected African Countries," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 8(4), pages 90-98, October.
  • Handle: RePEc:jfr:ijfr11:v:8:y:2017:i:4:p:90-98
    DOI: 10.5430/ijfr.v8n4p90
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    Cited by:

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    2. Clement Olalekan Olaniyi & James Temitope Dada & Nicholas Mbaya Odhiambo & Xuan Vinh Vo, 2023. "Modelling asymmetric structure in the finance-poverty nexus: empirical insights from an emerging market economy," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(1), pages 453-487, February.
    3. Kouadio, Hugues Kouassi & Gakpa, Lewis-Landry, 2022. "Do economic growth and institutional quality reduce poverty and inequality in West Africa?," Journal of Policy Modeling, Elsevier, vol. 44(1), pages 41-63.
    4. A. O Olohunlana & R. O. S Dauda, 2019. "Implications of financial development on poverty and inequality: Evidence from Nigeria," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 22(71), pages 42-59, March.
    5. James Temitope Dada & Taiwo Akinlo, 2021. "Foreign direct investment and poverty reduction in sub-Saharan Africa: does environmental degradation matter?," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.
    6. Doukouré Charles Fe & Jeffrey Kouton, 2023. "The Banking Sector, the Engine of Inclusive Growth in WAEMU Countries: Decoy or Glimmer?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 472-502, March.
    7. Simplice A. Asongu & Valentine B. Soumtang & Ofeh M. Edoh, 2021. "Financial institutions, poverty and severity of poverty in Sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 21/081, African Governance and Development Institute..
    8. Haffejee, muhammad Ismail & Masih, Mansur, 2018. "Is the relationship between financial development and income inequality symmetric or asymmetric ? new evidence from South Africa based on NARDL," MPRA Paper 87574, University Library of Munich, Germany.
    9. Oluwayemisi Kadijat ADELEKE & Omowunmi Monisola AJEIGBE, 2021. "Financial Openness and Poverty Level: The Empirical Investigation in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(2), pages 158-164, February.

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